 Welfare and equity impact of consumption tax policies: A micro-macro-economic approach applied to ItalyBarbara Bratta, Silvia Carta, Paolo Di Caro, Marco Manzo and Carlo Orecchia Economic Systems, 2025, vol. 49, issue 3 Abstract: This paper develops a micro-macro modelling approach to evaluate the impact of tax policies on economic growth and equity. The empirical framework benefits from the availability of micro administrative data and incorporates household- and sector- heterogeneity, detailed information on the tax system, and tax evasion features. The application of the integrated model to a uniform consumption tax rate reform in Italy yields the following results. We find positive output consequences of the policy, though with sector-specific growth patterns. We also document negative impact on income distribution that varies across households. Our results suggest that when tax evasion is included in the analysis, the positive impact on economic growth is amplified, with major consequences on export-oriented sectors, while the negative impact on equity diminishes. The results are valid after performing different sensitivity checks and alternative integration processes. Finally, policy implications are discussed. Keywords: Micro-macro modelling; Microsimulation; CGE modelling; tax policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:49:y:2025:i:3:s0939362525000214 DOI: 10.1016/j.ecosys.2025.101309 Access Statistics for this article Economic Systems is currently edited by R. Frensch More articles in Economic Systems from Elsevier Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.